Determining Choice of Law in Toxic Tort Litigation

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1 TOXIC TORTS AND ENVIRONMENTAL LAW A Look Beyond the Place of Injury By Philip L. Harris and Jennifer L. Dlugosz Determining Choice of Law in Toxic Tort Litigation The many nuances that can arise in toxic tort cases suggest that choice of law issues may be worthy of pursuing. A chemical spill occurs when a train derails in California, killing several people visiting from Oregon and contaminating property near the railroad tracks. The company that owned the train cars and chemicals aboard them is a foreign company with offices in Florida and a chemical manufacturing plant in Mexico. The estates of the injured parties bring a lawsuit in California, alleging negligence three years after the spill, and the court must decide which law to apply to the various issues and claims in the case. If California or Oregon law is applied, the case may be barred by the statute of limitations. If Florida law is applied, there is no statute of limitations issue. Further, if California law is applied, the estates will not be able to collect pain and suffering damages, but if Oregon law is applied the estates may be able to collect such damages. If an argument can be made that Mexican law applies, the parties may need to hire experts to research, interpret and translate the potentially applicable law and determine whether it conflicts with U.S. law. With the globalization of today s economy, conflicts of law issues are seen regularly in courtrooms across the country. While a few decades ago, choice of law issues in toxic tort cases might have escaped rigorous analysis, courts today review many factors beyond merely the place of injury under what has been dubbed the most significant relationship approach. This article discusses the historical treatment of choice of law rules and how the current rules are applied in modern day toxic tort actions. When a Conflict of Law Arises Before engaging in a conflict of law analysis, a court must first determine that there is a conflict between the laws of the forum jurisdiction and those of another state or country. If there is no conflict, a court will apply the law of the forum. If a conflict is identified on a particular issue, then a court looks to the forum jurisdiction s choice of law principles to decide which law applies. In diversity actions in a federal court, a court will apply the choice of law principles of the forum state. Philip L. Harris is a partner and Jennifer L. Dlugosz is an associate in the Chicago office of Jenner & Block LLP. Mr. Harris is co-chair of the firm s Product Liability and Mass Tort Defense Practice. He has successfully defended jury cases involving multi-million dollar compensatory and punitive damages claims, and has served as national, regional, and generic defense counsel for companies facing repetitive exposure issues. Ms. Dlugosz focuses her practice on product liability, toxic torts, and complex commercial litigation. She was recently appointed to the DRI Young Lawyers Committee Steering Committee. 30 For The Defense April 2014

2 Even if a court makes a determination that another jurisdiction s law applies to a particular issue, a court is not required to decide all issues in the case under the other jurisdiction s law. For example, most courts under traditional choice of law principles will still apply the forum law to issues such as service of process, pleadings, joinder of parties, and trial administration. Restatement (Second) of Conflict of Laws (1971) 145. Further, as discussed later in this article, a court also may apply different state law to different defendants and to different issues under the doctrine of dépeçage. History of Choice of Law Rules For many years, the majority of courts in the United States applied the rule of lex loci delicti to tort cases, under which the place of injury determines choice of law. This also was the position of the original Restatement on Conflicts of Law. This approach has its shortcomings. In some situations the place of injury has little or no relationship to the incident or the parties. Thus, these choice of law analyses have increasingly evolved, and many courts have adopted the most significant relationship test from the Second Restatement in lieu of the place of injury approach. Under the most significant relationship approach, the rights and liabilities of the parties regarding a particular issue are determined by the local law of the state that has the most significant relationship to the occurrence and the parties. Restatement 145. The most significant relationship is determined by reviewing a number of factors, including (1) the needs of the interstate and international systems; (2) the relevant policies of the forum; (3) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; (4) the protection of justified expectations; (5) the basic policies underlying the particular field of law; (6) certainty, predictability and uniformity of result; and (7) ease of the determination and application of the law to be applied. Id. at 6. Contacts to be taken into account when applying the principles above to a tort case include (1) the place of the injury; (2) the place where the conduct causing the injury occurred; (3) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (4) the place where the relationship, if any, between the parties is centered. Id. at 145. Depending on the facts of a case, some of these factors will be more important and have more weight than others. For example, in a toxic tort case when the injury is the result of an accident, there often was not a relationship between the parties before the incident causing the alleged injury. Similarly, the factor of protection of justified expectations may not play a large role in toxic tort cases because those causing unintentional harm likely did not consider the law that would be applied to a future lawsuit. See id. at cmt. (1)(b). Although the majority of jurisdictions have adopted the most significant relationship approach to conflict of law issues, in many personal injury and wrongful death cases, state conflict of law rules include a rebuttable presumption that the state where the injury occurs determines the rights and liabilities of the parties. See Restatement 146 & 175. However, for wrongful death matters, the place of injury is not always the place of death, but rather the place where the force set in motion by the actor first takes effect on the person. See id. at 175 cmt. b. The Typical Approach In toxic tort cases that result from a sudden, isolated or fortuitous incident, the place of injury likely will not hold as much weight in the choice of law determination. However, in toxic tort cases where the exposure to the toxic substance occurred over a period of years in one location, courts generally will find that the state where the injury occurred controls the rights and liabilities of the parties unless some other state has a more significant relationship to a particular issue. An illustration of this is the decision in Byers v. Lincoln Electric Co., 607 F. Supp. 2d 840 (N.D. Ohio 2009). In Byers, the court held that when a plaintiff was exposed to toxic fumes in several states, the state that had the most significant relationship to the case was the one in which plaintiff s most prolonged exposure occurred. The plaintiff was a welder who alleged that he inhaled fumes from welding rods that contained manganese and as a result he suffered permanent neurological injury and other harm. During discovery, the plaintiff alleged that he was exposed to the manganese at over 100 different job sites in 15 different states. The plaintiff performed most of his welding work in Texas, but he also performed some welding work in Alabama, where he also resided. The plaintiff filed the lawsuit in Ohio where two of the largest defendants were headquartered. The court determined Courts also may hold evidentiary hearings to determine how to interpret foreign law properly. that conflicts existed between the laws of Alabama, Texas and Ohio. For example, Ohio and Texas law recognize comparative negligence while Alabama follows the doctrine of contributory negligence. The court applied the choice of law rules of the forum, Ohio, which follows the most significant relationship approach. Under Ohio law, there also is a rebuttable presumption that the law of the state where the injury occurred will determine liability. The plaintiff argued that the place where his injury occurred was not limited to one location because of his work in multiple states, and therefore, the place of injury factor was not determinative. The court disagreed, finding that while the plaintiff had some exposure in several other states, the vast majority of his welding jobs occurred in Texas, and Texas had the most substantial relationship to the personal injury. With regard to the place where the conduct causing the injury occurred, the plaintiff argued that because the defendants manufactured most of the relevant products in Ohio and made decisions regarding warnings in Ohio, this factor should weigh in favor of Ohio law. The court disagreed, finding that only some of the defendants were headquartered in Ohio and under Ohio law a failure to warn occurs at the place where the plaintiffs could reasonably have been warned regardless of where the decision not to warn took place. Id. at 851. The court held that because the plain- For The Defense April

3 TOXIC TORTS AND ENVIRONMENTAL LAW tiff used the defendants products primarily in Texas, this factor also weighed in favor of applying Texas law. The court also considered the domicile of the parties. The defendants states of incorporation and principle places of businesses were all different; therefore, the court determined that this factor played no role in its analysis. The court also reviewed Several courts have addressed this very issue and have held that different states laws can be applied to different defendants and different issues in a case. The process of applying the rules of different states to determine different issues is called dépeçage. the facts regarding the place where the relationship between the parties was centered but found that there was never any real, personal, ongoing relationship between the parties. Finally, the court considered the broader principles that underlie the choice of law analysis, including Texas policy to compensate its citizens and residents for injuries inflicted on them through tortious conduct. Taking into consideration these factors, the court determined that Texas law should apply. If the facts in Byers were slightly different, for example, if the plaintiff did not perform a majority of welding work in any one state, it is possible that the court would have applied law from a place other than the place of injury. In many personal injury and wrongful death cases, despite evidence that several other jurisdiction s law might be relevant, courts will often decide that the place of injury has the most significant relationship to a case. In fact, several 32 For The Defense April 2014 states, including Alabama, Georgia, Kansas, Maryland and Virginia, still follow the place of injury approach, and not the significant relationship approach, for choice of law decisions in tort cases. See Symeon C. Symeonides, Choice of Law in the American Courts in 2012: Twenty-Sixth Annual Survey, 61 Am. J. Comp. L. 217, 278 (Spring 2013). See also Lifestar Response of Ala., Inc. v. Admiral Ins. Co., 17 So. 3d 200 (Ala. 2009) ( Under the principle of lex loci delicti, an Alabama court will determine the substantive rights of an injured party according to the law of the state where the injury occurred. ); Bullard v. MRA Holding, LLC, 292 Ga. 748, 750 (Ga. 2013) ( for over 100 years, the state of Georgia has followed the doctrine of lex loci delicti in tort cases ); Ortiz v. Biscanin, 34 Kan. App. 2d 445, 466 (Kan. Ct. App. 2004) ( the rule in this state is that the law of the state where the tort occurred lex loci delicti should apply. ); Erie Ins. Exch. v. Heffernan, 399 Md. 598, 620 (Md. 2007) ( Maryland law is clear that in a conflict of law situation where the events giving rise to a tort action occur in more than one State, we apply the law of the State where the injury the last event required to constitute the tort occurred. ); Jones v. R. S. Jones & Assocs., 246 Va. 3, 5 (Va. 1993) (holding that the lex loci delicti standard is the settled rule in Virginia. ). If state law takes the most significant relationship approach, a careful review of the facts and evidence available should be made because it is possible that a state other than the place of injury has a more significant relationship to the parties. Further, when there are multiple places of injury or exposure, the jurisdiction with the most significant relationship may vary by issue or defendant. Special Considerations in Cases Involving International Law While looking to case law and statutes can determine whether a conflict exists between the laws of two states, determining whether a conflict exists between the law of a state and a foreign country might be more difficult. This is particularly true in foreign jurisdictions that do not follow common law or the doctrine of stare decisis. Thus, in cases involving conflict of law issues between a state and a foreign country, it often is necessary to hire an expert to interpret the foreign law and to assist in determining whether a conflict exists. Because a court will have few if any cases on which to rely, having an expert s affidavit and testimony discussing the foreign jurisdiction s law is often necessary. See, e.g., In re Aircrash Disaster Near Roselawn, Indiana, On October 31, 1994, 1997 WL , 1 (N.D. Ill. Sept. 9, 1997) (where defendants presented expert affidavits to assist in the court s determination of whether French law permits punitive damages). Under Federal Rule of Civil Procedure 44.1, a court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence when determining the law of a foreign jurisdiction. Fed. R. Civ. P See also Estate of Botvin v. Islamic Republic of Iran, 772 F. Supp. 2d 218, (D.D.C. 2011) (upholding the district court s decision to apply Israeli law). Courts also may hold evidentiary hearings to determine how to interpret foreign law properly. For example, in Doe v. Texaco, Inc., 2006 WL , at 1* (N.D. Cal. Oct. 11, 2006), a toxic tort action regarding alleged exposure to contaminated water, the district court held an evidentiary hearing to determine the proper interpretation of Ecuador law. During the hearing, the plaintiffs and the defendants each presented an attorney from Ecuador to testify as an expert on Ecuador law. Following that hearing the court issued an order regarding the interpretation of the relevant Ecuadorian law, then at a later date, following discovery, the court determined whether California or Ecuador law applied to the relevant issue. Gonzales v. Texaco, Inc WL (N.D. Cal. 2007). When the views among the experts conflict, courts sometimes have appointed an independent expert. See Carbotrade S.p.A. v. Bureau Veritas, 1998 WL (S.D.N.Y. July 13, 1998) (appointing an independent expert on Greek law to testify during an evidentiary hearing along with plaintiff s and defendant s experts). Ideally, of course, the parties would agree about the content of the controlling law. Different Law for Different Defendants In toxic tort cases with multiple defendants, applying the laws of one state may

4 not be appropriate for all defendants. In asbestos cases, and other toxic tort cases in which exposure to the alleged toxic substance occurred in several states and in which defendants are headquartered in different states, courts often must determine the law that applies to different issues and different defendants. Take for example a toxic tort exposure case in which the plaintiff worked for Company A for five years while living in California and later worked for Company B for 10 years while living in Wisconsin. Company A was headquartered in California, and Company B was headquartered in Delaware. The plaintiff was exposed to the same toxins from both companies and was diagnosed while retired and living in Missouri with an illness that allegedly occurred from the exposures. Applying only California, Wisconsin, Missouri or Delaware law might not be appropriate for all the defendants. While California law may be the proper law to apply for Company A, there is no nexus to California for Company B. Several courts have addressed this very issue and have held that different states laws can be applied to different defendants and different issues in a case. The process of applying the rules of different states to determine different issues is called dépeçage. See Kilberg v. Northeast Airlines, 9 N.Y.2d 34 (1961) (applying the Massachusetts wrongful death statute to the issue of liability for the death but applying New York law to the measure of damages); Ewing v. St. Louis-Clayton Orthopedic Group, Inc., 790 F.2d 682 (8th Cir. 1986) (upholding the district court s application of Missouri law to the issue of whether the physician was guilty of common law negligence and the district court s application of Illinois law to other aspects of the case, but reversing the court s application of Illinois law to the issue of collateral estoppel, finding that the law of the forum state applies to that issue). An example of a toxic tort case in which the court applied dépeçage is Goede v. Aerojet General Corp., 143 S.W. 14 (Mo. Ct. App. 2004). In Goede, the plaintiff s secondary exposure to asbestos occurred in both California and Wisconsin. The plaintiff died as a result of her asbestos- related disease in Missouri. The trial court determined that California law would govern the issues of liability for one defendant because the exposure to that defendant s asbestoscontaining materials occurred in California, and Wisconsin law would apply to another defendant because the exposure to that defendant s asbestos- containing materials occurred in Wisconsin. The court, however, applied the law of Missouri to the issue of damages. At trial, a verdict was entered against the California defendant that included an award of damages for pain and suffering. On the appeal, the California defendant argued that since California law applied to liability, California law should also determine the measure of damages and therefore the trial court erred in applying Missouri law. The appellate court upheld the trial court s determination that Missouri law applied to the damages inquiry, reasoning that Missouri had the most significant relationship to the issue of damages because it was the state where the decedent resided before death and where the decedent was diagnosed and treated. The court held that Missouri had the predominant interest in the issue of damages for a wrongful death occurring within its boundaries and that Missouri public policy favored recovery of certain damages in a wrongful death action. The court also noted the ease of determination in application of Missouri law, given that there were two defendants at trial with two different bodies of law applicable for liability. In determining which state s damages law to apply, the court in Goede placed significant weight on the location of the decedent s death, the location of the surviving plaintiffs and the public policy of the forum state in providing damages for a wrongful death. When the place of injury is fortuitous or when an injury resulted from a sudden or isolated incident, courts may be more willing to find that law other than the place of injury applies to damages. For example, in Singh v. Edwards Lifesciences Corp., 151 Wn. App. 137 (Wash. Ct. App. 2009), the court held that the choice of law analysis favored California law for purposes of awarding punitive damages because the defendant was headquartered in California, the defect in the product was discovered in California and the decision not to recall the product was made in California. While the plaintiff underwent surgery and was exposed to the defective product in Washington, the court held that [t]he conduct that serves as the basis of the punitive damage award here occurred in California and that state has an interest in deterring its corporations from engaging in such fraudulent conduct. The doctrine of dépeçage can help both plaintiffs and defendants. For example, when a dispute involves whether the law of a foreign country or the law of the United States applies, plaintiffs may argue that the law of the foreign country applies to the determination of liability, but that the law of punitive damages of the United States should apply since many civil law countries do not award punitive damages outside of criminal proceedings. Plaintiffs would argue that U.S. law applies to damages when a company is domiciled in the United States and made decisions concerning its conduct and warning in the United States; however, those factors alone should not suffice to allow deciding the damages under different law than the liability when the company has had significant contacts with the place of injury. Statutes of Limitation and Statutes of Repose Another common issue in toxic tort cases that involve choice of law issues is which jurisdiction s statute of limitations and statute of repose applies to an action. A statute of limitations bars a plaintiff from bringing an already accrued claim after a specified time, while a statute of repose terminates a right of action after a specific time even if an injury has not yet occurred. Courts have generally viewed statutes of limitations as procedural and therefore not subject to conflict of law analyses. Wayne v. Tennessee Valley Authority, 730 F. 2d 392 (5th Cir. 1984). Statutes of repose, on the other hand, are generally characterized as substantive provisions and therefore subject to conflict of law analyses. See, e.g., Boudreau v. Baughman, 322 N.C. 331, 341 (N.C. 1988); Goad v. Celotex Corp., 831 F. 2d 508, 511 (4th Cir. 1987) ( Statutes of repose are meant to be a substantive definition of rights as distinguished from a procedural limitation on the remedy used to enforce rights. ); Wayne, 730 F. 2d at ( Statutes of limitation, though they can have a material effect on the outcome of a case, are usually characterized as procedural. Accordingly, the forum s own statute For The Defense April

5 TOXIC TORTS AND ENVIRONMENTAL LAW of limitation is usually applied even though the choice of law analysis dictates that a foreign jurisdiction s substantive law be applied. ). Some jurisdictions have borrowing statutes to prevent forum shopping for the most favorable statute of limitations. A borrowing statute allows the forum jurisdiction to borrow a shorter statute of limitations for a cause of action arising in another state. For example, the Delaware borrowing statute is designed to prevent a nonresident from bringing a foreign cause of action in Delaware that the foreign jurisdiction statute of limitations precludes but that the Delaware statute of limitations does not. See, e.g., Saudi Basic Indus. Corp. v. Mobil Yanbu Petrochemical Co., 866 A.2d 1 (Del. 2005); 10 Del. C Courts have been willing to apply the statute of repose of a nonforum state even when such application would bar a plaintiff s claim. See Lawson v. Valve-Trol Co., 81 Ohio App. 3d 1 (1991) (applying Indiana statute of repose that barred plaintiff s right of action); Crisman v. Cooper Indus., 748 S.W.2d 273 (Tex. App. 1988) (applying Florida product liability statute of repose which prevented plaintiff s wrongful death claim from ever arising). In Caswell v. Olympic Pipeline Co., the Ninth Circuit upheld summary judgment granted by the district court to the defendants, finding that the Oregon statute of repose applied and therefore the plaintiff s claims were not actionable. 484 F. App x 151 (9th Cir. 2012). Under the Oregon statute of repose, an action must be brought within eight years, but under the Washington statute of repose an action must be brought before the product s safe useful life has expired. The Washington statute of repose establishes a rebuttable presumption of 12 years to determining a safe useful life. The plaintiff alleged that he developed leukemia as a result of working around gasoline and other petroleum products in Oregon. The district court applied the Washington choice of law analysis, which applies the most significant relationship test. Caswell v. Olympic Pipeline Co., 2010 WL (W.D. Wash. 2010). When the factors of this test are in balance, Washington law analyzes public policy to resolve the issue. The plaintiff alleged that he was a resident of Washington and that the defendants designed and manufactured 34 For The Defense April 2014 their defective products in Washington, and therefore, there was a significant relationship to Washington. The defendants argued that the plaintiff was injured in Oregon while working for an Oregon company that purchased its products in Oregon, and therefore, Oregon had the most significant relationship to the case. The court held that the factors argued by the defendants weighed heavily in favor of finding that the most significant relationship existed in Oregon and that the Oregon statute of repose applied. In comparing other cases, the district court seemed to indicate that if the defendants were headquartered in Washington, the analysis could have tipped the other way because policy questions would then come into play. Since a statute of repose other than that of the forum may apply in toxic torts cases, defense counsel should review the statutes of repose in all jurisdictions with a relationship to a case to determine if there is any possible basis to seek dismissal on that ground. Properly Raising and Noticing Issues of Conflict of Laws After determining that there is a conflict of law in a case, toxic tort practitioners must determine when and how to raise the conflict of law issue with a court. Courts often will require parties to brief and argue choice of law issues fully in separate filings before they file motions to dismiss. This briefing will serve to educate a court on the facts so that a court can engage in an informed analysis because a complaint will often lack sufficient facts for a court to make a choice of law determination on its face. For example, in Burdick v. Air & Liquid Systems Corp., 2012 R.I. Super. Lexis 166 (R.I. 2012), the court held that the complaint contained insufficient facts to determine which law applied at the motion to dismiss stage. The complaint did not state which law the plaintiffs alleged applied and implicated the laws of three different states. Consequently, the court was unable to rule on the motion to dismiss and invited the parties to brief and argue the choice of law issues. See also Speedmark Transportation, Inc., v. Mui, 778 F. Supp. 2d 439, 444 (S.D.N.Y. 2011) (holding that a choice of law determination was premature on a motion to dismiss because the record lacks facts necessary to conduct the context- specific analysis required by New York s choiceof-law principles. ) Discovery, however, is not always needed to determine the choice of law, especially when a plaintiff s allegations compel applying a certain jurisdiction s law. See Integral Res. (PVT) Ltd. v. Istil Group, Inc., 2004 WL , at *3 (D. Del. Dec. 2, 2004) (permitting choice of law discovery but then conducting its analysis based on the complaint s allegations). Defense counsel should evaluate whether there are any choice of law rulings that need to be made before they pursue a motion to dismiss. In some jurisdictions it is very important to raise the choice of law early or risk a presumption that the law of the forum applies. In The Burlington Northern Santa Fe Railway Co. v. Gunderson Inc., 235 S.W.3d 287 (Tex. App. 2007), the trial court applied the law of the forum, and the appellate court upheld that decision, when the plaintiff failed to request judicial notice of the law of another state. The defendants moved for summary judgment and argued that the plaintiff s claims against them were barred by the statute of repose. The plaintiff replied that Texas law did not apply to the claims but did not move the trial court to take judicial notice of any other state s law. Under Texas law, [w]hen a party fails to request judicial notice of the law of another state Texas courts will simply presume that the law of the other state is identical to Texas law. Id. (quoting Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671, 695 (Tex. 2006)). The trial court granted summary judgment to the defendants, finding that the statute of repose barred the plaintiff s claims. It is important for defense attorneys to review the law in the relevant jurisdiction as early as possible on receiving a complaint to ensure timely notice to a court of the potential applicability of another jurisdiction s laws. Conclusion Returning to the hypothetical discussed at the beginning of this article, because the case was brought in California, the forum court s statute of limitations would apply, and the court would likely dismiss the case because the statute of limitations period had expired. If the statute of limitations period had not expired, the court would need to decide which jurisdiction s

6 law applied to damages. While the place of injury was California, there appears to be no other significant relationship to California because the decedents and their heirs resided in Oregon, and the defendant company was domiciled in Florida with a chemical plant in Mexico. Similar to Goede, the court might place substantial weight on the fact that Oregon had the most significant contact with decedents and the surviving plaintiffs were residents of Oregon. A plausible argument, however, may be made that California law should apply. Arguments for Florida law or Mexican law would be more difficult to make given the limited facts available, but the defendants might argue that Florida or Mexico was where the defendants were domiciled and possibly where the conduct causing the injury occurred. While at first glance, choice of law issues in toxic tort matters, especially in personal injury and wrongful death cases, may seem unworthy of pursuing because of the general presumption that the law of the place of injury will apply, there are many nuances that arise in such cases that suggest a different approach. Upon receiving a case, defense counsel should review all the issues, including statute of limitations, statutes of repose, liability issues and damages. Even if the law of the place of injury ends up controlling the liability determination, it is possible that another jurisdiction s law could control the measure of damages and other issues in a case, and that those laws could favor your client more. For The Defense April

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